Accenture 2017 Global Risk Study: Capital Markets Summary

2017 GLOBAL RISK MANAGEMENT STUDY
Copyright © 2017 Accenture. All rights reserved. 2
IN ADDITION TO THE SURVEY WE CONDUCTED QUALITATIVE INTERVIEWS
BANKING
INSURANCE
CAPITAL MARKETS
The Accenture 2017 Global Risk Management Study is the fifth edition of our study first
published in 2009.
CFOs, CROs, CEOs, CCOs, CDOs
who are involved in their
organization’s risk decisions
COMPANY SIZE
50% with global revenues or income
between US $1bn & 5bn, 50% with
revenues over US $5bn
SURVEYED 475
each from Europe, North America,
Americas and Asia-Pacific.
This includes key markets such as the
Canada, US, Germany, France, Italy,
Spain, UK, Australia and Japan to
enable analysis at country level
100 TO 200 RESPONSES FOCUSED ON THREE
INDUSTRY SECTORS:
Accenture 2017 Global Risk Management Study: Capital Market Report.

EVOLUTION OF RISK MANAGEMENT
IN FINANCIAL SERVICES
TECHNOLOGY
TALENT
INTEGRATION
The risk function has evolved—from crisis management in 2009 to today’s more integrated, fluid and maturing
discipline. We’ve witnessed technology’s growing influence, the changing profile of the risk professional and the
integration of risk management across the organization. Despite progress, barriers persist.
2009
BEGINNING
MATURITY
CRISIS
MANAGEMENT
THE RISE
OF DIGITAL
COLLABORATION
PARTNER
DISCIPLINED,
INTEGRATED
2011 2013 2015 2017
Technology as
newest strategic
priority
Systems integration
still a barrier
Building analytical
capabilities
The power
of automation
to come
Risk resource
in short supply
Rising headcount Lack of specialized
technology skills
Demand for
data specialists
Technology not fit
for purpose
Shortage in
emerging technology
capabilities
Risk silos Towards a new
risk culture
Direct line to the
Chief Executive
Officer (CEO)
Chief Risk Officer
(CRO) at
executive table
Still closing the
risk-finance gap
For more details on the evolution of risk management, view our interactive timeline.

CAPITAL MARKETS RISK
OUR 2017 FINDINGS
4
Our 2017 study finds that many capital markets firms are striving to adopt a proactive, fluid approach to risk
management. But changes are necessary to keep pace with dramatic advances in technology and to address
a set of new and emerging risk types.
What risk challenges do
capital markets firms face in 2017?*
* Respondents were asked: “To what extent do the following challenges impede the overall effectiveness of your risk
management function?” Data shows aggregated proportions selecting “to a great extent” and “to some extent.”
Emerging risks:
threat or opportunity?
Copyright © 2017 Accenture. All rights reserved.
CHALLENGES
• Cyber Risk: 60% of capital
markets respondents say
cyber risk is having a greater
impact on their institution than
two years ago
• Cloud: Respondents cite
cyber attacks, data breaches
and risk with third-party
hardware as the biggest risks
associated with cloud
OPPORTUNITY
• Some firms see third-party
cloud services as far more
secure than their own private
clouds
• Moving to the cloud forces
certain behaviours such as
encryption and tokenization of
data
TECHNOLOGY CHALLENGE OVERALL
INVESTMENT
BANKING
ASSET
MGMT
WEALTH
MGMT
Increased velocity,
variety and volume of data
71% 52% 79% 68%
Disruption of business
models from digital
technologies
70% 71% 79% 59%
TALENT CHALLENGE
Shortage of skills in new
and emerging technologies
61% 45% 70% 68%
Shortage of core risk
management talent and skills
60% 50% 60% 68%
INTEGRATION CHALLENGE
Lack of integration with
other business functions,
e.g. front office, operations, finance
56% 67% 56% 49%

HOW CAPITAL
MARKET FIRMS
ARE RESPONDING

THE PATH FOR RISK MANAGEMENT
In an environment of low interest rates, narrow margins and increased capital requirements, capital
markets firms are finding ways to simplify and innovate. Successful risk management strategies are
those that achieve a productive balance across three key areas: technology, talent and integration.
1. SMART, NOT
SHORT-TERM,
TECHNOLOGISTS
2. TALENT GAP:
EVOLVING
SKILLS, SHORT
SUPPLY
3. DEEP
INTEGRATION
OF RISK
Strategic application of
new technologies such
as artificial intelligence
(AI), cloud and big data,
to drive value and
improve risk outcomes
Increasing the potential
of people, new tools
and legacy systems
Stronger coordination
of risk activities and
integration between
finance and risk,
based on a foundation
of common data

1. SMART, NOT SHORT-TERM, TECHNOLOGISTS
FROM EXPERIMENTAL TO ESSENTIAL
New technologies, including machine learning, AI and robotic process automation (RPA), coupled with smarter
ways of working, are key to a more flexible, proactive risk function. But capital markets respondents have not fully
exploited these technologies.
How advanced is your institution’s use of the following technologies?*
* Respondents were asked “Thinking about the range of technologies that you use to support your risk management function,
how advanced is your institution’s use of the following technologies?” (Base: 126 – capital markets)
We are highly proficient
in using this technology
Starting to use to
some extent
Not using it and do not
see the potential
We use the technology for
risk function but we’re not
extracting full potential
Not using it but see
the potential
Cloud
Big data and analytics
Collaboration and
workflow tools
Robotic process
automation
Artificial intelligence
Machine learning
25% 36% 32%
23% 33% 33%
19% 36% 28%
15% 23% 34%
14% 26% 37%
8% 36% 31%
6%
8%
16%
19%
15%
20%
8%
5%
9%
1%
3%
1%

PREPARING THE GROUND FOR ROBOTS
A minority of capital markets respondents
describe themselves as “highly proficient”
in using RPA
Are relatively mature in their usage:
using RPA to replace high-volume,
low-value-added tasks
• Reviewing disclosures
• Scanning transactions
• Assessing incident reports
• Predicting risk exposures changes
• Rapidly checking data quality
15% 58%
Today, intelligent automation (RPA, machine learning and AI) is more experimental than embedded.
Longer term, risk functions see deeper value from the use of more advanced intelligent automation.
A MINORITY ARE HIGHLY
PROFICIENT IN RPA
FOR THOSE ADOPTING INTELLIGENT
AUTOMATION TO SOME EXTENT
LIST OF RPA AND AI
APPLICATIONS IS EXPANDING

FROM AUTOMATION TO GENUINE INSIGHT
To realize the full potential of intelligent automation, robots, technology and humans should be tightly
aligned. Risk functions that learn to harness the power of AI can provide more transformational insights,
along with greater speed of action.
* Source: “The Future of Finance: More Data, Fewer People,” Institutional Investor, May 2, 2017.
Access at: www.institutionalinvestor.com/article/3713883/banking and-capital-markets-
banking/the-future-of-finance-more-data-fewer-people.html#.WWeBdmOx38s
BUT SOME FIRMS ARE GOING
A STEP FURTHER*
A financial services institution is piloting a robot
or virtual assistant that is programmed to answer
basic compliance questions and is one of more
than 20 robots operating across the company
Its aim is to cut the number of calls to the bank’s
compliance call center by 50%
14%
Only a minority (14%) of capital
markets respondents are using
more advanced AI and machine
learning tools to derive better
outcomes from data

DATA ANALYTICS ON THE CUSP
Capital markets firms have made significant investments in data analytics,
setting up centralized processes to capture data and taking an enterprise-
wide view of risks. Enthusiasm for data analytics is clear with 37% using it
to a great extent to address cost pressures. But barriers persist.
One-third are using the technology, but not
to its full potential. That will happen, they
believe, when analytics is more embedded
into the risk management culture
1/3
66%
1/4
Only a quarter believe their risk functions
are very prepared to meet the requirements
for regulators to have access to high-quality
and consistent risk data
Risk data reporting is still overly
reliant on legacy tools, with 66%
saying legacy technologies impede
effectiveness of the risk function
Data lineage within many firms poor due to:
• Complexity of capital markets data flows
• Legacy systems
• Multiple transformations and interventions
NOT USED TO FULL POTENTIAL
POOR DATA LINEAGE
NOT PREPARED TO MEET
REGULATORY REQUIREMENTS
DATA REPORTING OVERLY RELIANT
ON LEGACY TOOLS

CLOUD’S REVOLUTIONARY ROLE
Capital markets institutions are embracing the cloud with clear enthusiasm.
The adoption of the public cloud within large, global institutions suggests the debate over its primacy is over.
CLOUD CAN CREATE
SIGNIFICANT EFFICIENCIES
AS WELL AS LARGE
COST SAVINGS
Capital markets firms actively
exploring the cloud highlight risk
management as an ideal test
case because of the function’s
need to process large quantities
of data, together with the huge
computational loads associated
with complex internal and
regulatory calculations
CLOUD CAN REDUCE
STRESS-TEST
REPORTING RUN TIME
One leading capital markets
firm is using analytics tools
and big data held in the cloud
to reduce the run time of
stress-test reporting from
days to minutes
SOME THIRD-PARTY
CLOUD SERVICES
HAVE BECOME
VERY SECURE,
EQUIVALENT TO AND
POSSIBLY SUPERIOR
TO CURRENT
INFRASTRUCTURE
This was observed by another
capital markets firm. Moving to
the cloud forced certain
behaviours such as encryption
and tokenization of data. Cloud
providers also go to significant
lengths to secure their data
centers due to reputational risk
“AS-A-SERVICE”
CLOUD-BASED
SOLUTIONS
A PRIORITY
Investment banks are
exploring moving to “as-a-
service” (aaS), cloud-based
solutions as a priority

2. THE TALENT GAP
EVOLVING SKILLS, SHORT SUPPLY
Capital markets leaders are looking to create teams that blend traditional risk
management experience and commercial acumen with a deep understanding
of new digital capabilities. But the search for a multi-talented team takes place
against a backdrop of skills shortages.
EVOLVING
RISK FUNCTION
• Increased knowledge of emerging
risks like cyber, through greater
third-party collaboration
• The risk management mentality is
one of value-enhancing
collaboration
• Becoming more multi-disciplinary
in its approach
• Has strengthened understanding
of the wider commercial context
SKILLS
SHORTAGE
61% of respondents say shortage
of skills in new and emerging
technologies impeded the risk
management function to a great
extent and to some extent
32% say they lack internal talent
in some specialized areas
26% say their risk function has
insufficient talent to carry out the
tasks it is asked to perform

2. THE TALENT GAP
MAPPING THE FUTURE
Over the next year, capital markets respondents are prioritizing their capabilities in understanding emerging
technology risk, data management and their ability to understand trends in the shift to digital business models.
Priority risk management capabilities over the next year*
* Respondents were asked “What are the priority risk management capabilities your institution
plans to strengthen over the next year? (Base: 126 – capital markets)
54%
57%
44%
61%
Understanding
of emerging
technology risks
(e.g. cyber)
Data
management
Understanding
of key trends
in our sector
(e.g. shift to digital
business models)
Advanced
mathematical and
statistical
knowledge
(e.g. enhancing quantitative
capabilities, actuaries and
data scientists)
Managing
reputational
risk associated
with social
media
Broader
commercial
awareness
Overall Capital Markets
Asset Management
Investment Banking
Wealth Management
40%
45%
37%
40% 39%38%37%
42%
36%
43%
39%
26%
37% 37%
29%
34%
15%
28%
21% 21%

3. DEEP INTEGRATION OF RISK
INTEGRATION CHALLENGES
Operating across multiple jurisdictions and locations, and the regional differences of risk teams, makes
it challenging to integrate the risk function with the wider business. At the heart of the integration
challenge is the problem of creating a common view of risk information.
of respondents struggle to balance local and
enterprise-wide risk priorities
say lack of integration with other business
functions impedes risk management
effectiveness
report duplication of effort in risk management
across business lines
60%
56%
56%

3. DEEP INTEGRATION OF RISK
THE CONNECTED RISK FUNCTION
Firms aspire to have a more integrated and connected risk management function
that is positioned to make the most of processes, methods, skills, knowledge and
solutions, while allowing operational sub-groups to exist where they are required.
IN THE NEXT TWO YEARS
expect risk management to
be more centralized across
all business lines,
up from 20% currently
expect finance and risk leaders to have
a close working relationship including
joint input into corporate strategy and
enterprise risk management steering,
up from 10% currently
44% 23%

FIVE SIMPLE BUT POWERFUL ACTIONS
TO TAKE NOW
Based on our research, in-depth consultations with capital markets risk leaders and
our own observations, we have compiled a set of five actions that can help risk functions
to rise to the challenges of continual regulatory change, rapid disruption from
unprecedented technological innovation, emerging risks and geopolitical instability.
DRIVE THE BUSINESS
TOWARD DIGITAL &
TECHNOLOGICAL INNOVATION
FIND THE IDEAL
BLEND OF SKILLS
PUSH FOR TOP-LEVEL
INTEGRATION
Effective digital innovation
depends on having the right
strategic vision, strong
governance, robust processes
and great delivery technology
Boost the risk management
function by creating teams that
blend traditional quantitative and
analytical skills with creativity,
technology acumen and industry
knowledge
Risk management is already
becoming more integrated with
finance and compliance, as
well as the front office, but greater
integration is often needed
for a more holistic approach
MOVE BEYOND DATA
MANAGEMENT
EMBRACE BUSINESS AND
INDUSTRY TRANSFORMATION
Risk talent should be engaged
in information analysis, while
automation and supporting
professionals manage data
quality, integrity, integration
and technical issues
The risk function should strive
to be more commercially aware
than ever in order to evolve its
role to support the firm
Copyright © 2017 Accenture. All rights reserved. 17Accenture 2017 Global Risk Management Study: Capital Market Report.

DOWNLOAD OUR
CAPTIAL MARKETS REPORT NOW
As the complexity of risk management in capital
markets increases, the function should continue
to adapt at pace and expand its remit.
RISK FUNCTION’S
FUTURE SUCCESS
Or contact:
Adam Markson: adam.markson@accenture.com
Adrian Glatz (ASG): adrian.glatz@accenture.com
Amit Gupta (North America): amit.a.gupta@accenture.com
Ashley Davies (North America): ashley.davies@accenture.com
Mark Wheaton (United Kingdom / Ireland): mark.wheaton@accenture.com
To learn more, visit
www.accenture.com/RiskStudyCapitalMarkets

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DISCLAIMER
This presentation is intended for general informational
purposes only and does not take into account the reader’s
specific circumstances, and may not reflect the most current
developments. Accenture disclaims, to the fullest extent
permitted by applicable law, any and all liability for the
accuracy and completeness of the information in this
presentation and for any acts or omissions made based on
such information. Accenture does not provide legal, regulatory,
audit, or tax advice. Readers are responsible for obtaining
such advice from their own legal counsel or other licensed
professionals.
Accenture, its logo, and High Performance Delivered are trademarks of Accenture.
Copyright © 2017 Accenture. All rights reserved.
EXPOSED: THE HIDDEN VALUE
OF RISK IN CAPITAL MARKETS
ACCENTURE 2017 GLOBAL
RISK MANAGEMENT STUDY

Accenture 2017 Global Risk Study: Capital Markets Summary

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